Brent Eases Amid Signals of Progress between US and Iran

In the news, first-round negotiations between the US and Iran to finalise a peace agreement have concluded with "encouraging progress," according to mediators Qatar and Pakistan. Both the US and Iran have reportedly agreed to a “de-confliction cell” to end military escalations in Lebanon, which Iran's foreign minister, Seyed Abbas Araghchi, described as the “first test.” Iranian lead negotiators departed Switzerland on 21 Jun, though discussions are expected to continue this week. Elsewhere, Ukrainian President Volodymyr Zelenskiy announced on Saturday, 20 Jun, that Ukrainian drones targeted an oil refinery in Russia's Tyumen Region in western Siberia, over 2,000km from Ukraine. He added that Ukraine has developed new long-range drones capable of operating beyond 3,000km. In China, the nation is setting up a second import terminal to manage LNG shipments from Russia's Arctic LNG 2 project, which currently relies on just one facility, according to Reuters sources. The new Longkou LNG terminal, located in eastern China's Shandong province and operated by state pipeline company PipeChina, is planned to receive Arctic LNG 2 cargoes. This second import terminal will allow China to import larger quantities of sanctioned Russian LNG, while providing Arctic LNG 2 with another export outlet. In Russia, seaborne exports of fuel oil and vacuum gasoil (VGO) declined by roughly 6% m/m to 3.2mmt in May, as Ukrainian drone attacks on energy infrastructure disrupted production and export flows. Saudi Arabia remained a major destination for these cargoes, supported by seasonal demand for power generation and air conditioning. However, shipments to the kingdom fell 17% from April to 1.23mmt, based on Reuters calculations. In other news, Malaysia will reduce its nationwide diesel price to 2.10 ringgit ($0.50) per litre from July, after the wide gap between subsidised and market-priced diesel encouraged smuggling and resulted in lost government revenue. Currently, diesel is sold at a subsidised rate of 2.15 ringgit per litre in the eastern states of Sabah and Sarawak, compared with 4.37 ringgit per litre in Peninsular Malaysia. Finally, at the time of writing, the front-month (Aug/Sep) and 6-month (Aug/Feb) Brent future spreads are at $0.44/bbl and $3.57/bbl, respectively.

Quiet morning in Dated with main focus being some crossweek trading in the prompt. We saw a decent sized seller of Jul trading down to $0.03/bbl but DFLs remained quiet overall. 22 vs 29 Jun was hit down to -$0.05/bbl and 22-23 vs 24-26 was sold at $0.02/bbl. We also saw a buyer of 13-17 Jul vs Cal Jul bidding up to $0.13/bbl in decent size with market makers offering around $0.14 to $0.15/bbl. Further down the curve, a UK major continued to bid Q4'26 DFL.

This morning in Brent/Dubai we continued to rally despite the majority of the interest being Chinese sellside interest. There was Chinese selling of Oct Brent futures vs Aug Dubai and Oct Brent futures vs Jul Dubai. The Jul Brent/Dubai traded up from $7.20/bbl to $7.75/bbl at the end of the window and then back down to $7.50/bbl afterwards. The Dubai spreads were very quiet, traded between -$0.70/bbl to -$0.94/bbl, generally more sellside interest in Jul/Aug and Aug/Sep. There was some sellside interest in the Jul/Aug box at $1.69/bbl, buyside interest in the Aug/Sep box at $1.33/bbl.

A quiet start to the week on VLSFO. Sing 0.5 was a touch better offered. Spreads started the trend of selling with Jul/Aug selling down to $20.00/mt from Friday's close of $22.50/mt. The crack followed suit with Jul closing the morning around $12.55/bbl from highs of $13.40/bbl. Further pressure came on Sing 0.5 from selling on 0.5 E/W and E/W boxes. Euro 0.5 did come off a touch due to Sing weakness but held up relative to its Sing counterpart. Euro cracks traded down to $6.00/bbl from $6.50/bbl on thin liquidity. It was a similar story on Euro spreads with very little spoken OTC, however Jul/Aug was implied a bit lower at $21.75/mt from $22.75/mt.

in HSFO, 380 saw some early buying in Jul/Aug, however, we saw very little price action as a result with the front spread remaining around $0.50/mt. There was a flat price buyer in large size on Jul and Aug 380, however the market absorbed this and the front 380 crack sold off down to -$8.20/bbl from around -$8.00/bbl. E/W traded down a touch to $2.25/mt. Barges were largely quiet this morning, Jul barge crack was implied down to -$8.60/bbl with Jul/Aug barges around $2.50/mt.

This morning in distillates, Sing gasoil spreads saw selling in July/August, but traded higher into the end of the window as IPE rallied, moving from $1.85/bbl down to $1.65/bbl before returning to $1.85/bbl last. Front E/W was initially sold into on July/August selling, before becoming well supported by front E/W and EFS buying. July E/W moved from -$35.50/mt up to -$35/mt. July/August kero was initially offered at $1.10/bbl before being hit lower at $1/bbl.

Prompt ICE gasoil spreads rallied during the window before cooling off post-window, with Sep/Dec trading from $50/mt up to $53.75/mt, then back to $51.75/mt last. Cracks followed a similar move, trading up to $39/bbl in August before easing back to $38.70/bbl last. Both heating oil spreads and HOGOs firmed overall, with the July HOGO swap trading from 28.7c/gal up to 29.2c/gal.

This morning in gasoline, Sing 92 flat price traded end window at $99.80/bbl with MOC better bid. Gasoline strengthened, with 92 cracks firming from $20.50/bbl to $21/bbl and Jul/Aug got bid up from $4.75/bbl to $5/bbl. E/W saw mixed interest around -$8/bbl, as July EBOB cracks rallied from $28.45/bbl to $29.12/bbl. Spreads were mixed, with Jul/Aug seeing slightly better sellside interest from tradehouses at $30.75/mt.

This morning in naphtha, MOC better offered in July getting sold -5c, with some buying in Aug MOC +5c for smalls. MOPJ spreads better offered with selling in July/Sep this morning, seeing E/W trade down from $28.25/mt to $27.50/mt this morning with trade house buyside. July naphtha crack traded rangebound this morning, up from -$6.60/bbl to -$6.40/bbl but coming off post window to -$6.50/bbl.

This morning in NGLs, FEI spreads opened at similar levels to last week’s close, with Aug/Sep lifted at -$2/mt, and Nov/Dec trading at flat. Across the morning the prompt Jul/Aug FEI spread strengthened $2 to settle at $6/mt end window. Jul LST/FEI was lifted at -$189/mt before softening into end window to settle at -$194/mt. There was also selling of the Q3/4'26 LST/FEI roll at -$5/mt where it firmed into close. Little interest in CP today, although the Jul/Aug spread was lifted at $60/mt, up from last week’s close of $55/mt. End window on screen, Jul FEI flat price was hit at $572/mt.